Logically -- mathematically -- the price of US government bonds ought to drop when the US dollar drops. Lower dollar means investors will demand more interest to make up for the lower dollar price, and bond prices move the opposite direction to their interest rates (yields). And as bonds have dropped, yields have risen. Maybe it's only a blip on the screen as the US dollar corrects its rally, but still it contradicts the Fed's Operation Twist that aims to lower long term rates, and the Fed's stated goal of keeping all interest rates down. Why am I bothering with this? If ever a stampede develops out of US government debt because the public is repudiating the dollar, it will start this way, with the US government having to pay higher and higher interest to compensate for expected inflation & dollar instability. Not saying that's happening now, just that its possible. The US DOLLAR index with a low at 77.34 today (closed 77.49, down 1.56%) right nearly touched the upper trading channel line of the channel the dollar broke out of to the upside. This classifies as that "Final Kiss Good-Bye" I mentioned yesterday. It's a move markets often make, breaking out to a new high (or low), then trading back to the same support/resistance that marked the breakout point. Now the dollar might fall a little lower, maybe to 76.75, or even to the 200 day moving average at 76, but none of those moves will gainsay the dollar's rally. Y'all will see soon the US dollar index priced in the 80s. Euro traded sideways, closed 1.36456, up -- get out your electron microscope -- 0.03%. The Japanese yen continues to torture its Nice Government Men and exporters by remaining stubbornly high. Closed today flat, up 0.02% at 130.45c/Y100 (Y76.65/$1). To set up the European bailout, 17 member states needed to agree unanimously. Today the last, Slovakia (population 5,429,763, fewer than Tennessee) voted AGAINST the bailout. The Germans have a word, "Schadenfreude" that means "gloating at someone's fall." Right now, I am fighting Schadenfreude over the eurocrats failure to bail out the banks. Probably, I am not fighting it hard enough. Good chance of that. Yep. Stocks today bounced off that bottom line of the Jaws of Death top I mentioned yesterday. Dow fell 16.88 (0.15%) to a 11,416.30 close. S&P flattened, up 0.65 [sic] to 1,195.54. I may not like stocks (and I don't, no more'n y'all like a copperhead snake) but I try to tear off the top of the chart & read faithfully what it says. They may rally, but I don't want any part of them. First off, that little rally shouldn't carry too far, according to overbought/oversold indicators. But let's say stocks go wild and shoot their biggest bolt & reach for that 200 dma way in the sky above at 11,968.90 -- what then? Still don't amount to a hill of beans, & they're in a bear market to boot. On the other hand, stocks are a fine candidate to fail right here & fall more. Wall Street 2011 -- what 250,000 Confederate soldiers died to prevent. I can't avoid pointing out that gold had yet another opportunity to pierce $1,675 today, and failed for the third time. Generally, third time's the charm, & if it fails it won't come back. Gold reached its flood tide at $1,681.57, but closed down $9.90 at $1,659.70. Gold has taken away one more reason to expect an immediate rally. O, and silver's close today! Silver rose one cent to close Comex at 3196.3, after a high of 3235c. That 3250c resistance held firm, and silver blinked. Possible it's building a flat topped rising triangle, with the flat top at 3250c, because the lows have been higher. Still, a silver dip under 3150c, not to mention 3100c, will send silver tumbling again. It's easy to misunderstand my outlook. I sound very negative on silver & gold, but that's a very short term view. I don't think the European crisis has ended, & on top of that a silver & gold correction to a 34-month rise is taking place. Yet all that will pass. And what if it drove silver & gold down another 20%? I don't care, because I am holding for the triple or quadruple we will see from that low. No, the silver & gold bull market has not near about ended. Lots more time and upside left. Don't forget that. On 11 October 1899 the Second Anglo-Boer War began in South Africa between the Boers of the Transvaal and Orange Free State & the British. British imperialists picked the fight, egged on by Rhodes & others, making it hard to say who was greediest to grab the gold mines in the Boer republics. The war became a nightmare for the British with its sluggish, arrogant Imperial army against the fast-moving, leather-tough, lion-fighting frontier Boers. Organized into militia "commandos" & armed with the latest German Mauser rifles, smokeless powder, and German artillery, and born in a saddle, the Boers ate the British alive. The war only turned to the British favor when they invented "concentration camps" into which the emptied out all the Boer wives & children from the countryside. Tens of thousands died, and the burned farms, scorched countryside & murdered families finally stopped the commandoes. The Boers call the war the Tweede Vryheidsoorlog -- the 2nd Freedom War. It took about 500,000 British soldiers and three years to conquer 83,000 Boers. Early in the war the Boers captured a train carrying Winston Churchill, then a war correspondent. He wrote of his first night imprisoned, "What men they were, these Boers! I though of them as I had seen them in the morning riding through the rain -- thousands of independent riflemen, thinking for themselves, possessed of beautiful weapons, led with skill, living as they rode without commissariat or transport or ammunition column, moving like the wind, supported by iron constitutions and a stern, hard Old Testament God . . . And then, above the rain storm that beat loudly on the corrugated iron, I heard the sound of a chant. The Boers were singing their evening psalm, and the menacing notes -- more full of indignant war than love & mercy -- struck a chill into my heart, so that I thought after all that the war was unjust, that the Boers were better men than we, that Heaven was against us . . ." His imperial view soon re-asserted its self-assurance against the terrifying sight of free men defending their homes. On 11 October 1809 Meriwether Lewis, returning to Washington after his long trek of discovery across North America, died on the Natchez Trace at an inn called Grinder's Stand. Today that spot is Meriwether Lewis Park, and it's about 35 minutes from where I'm sitting right now.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
|
